The Government’s refusal to provide a clear roadmap towards a permanent reopening is putting pressure on companies, particularly in the hospitality and leisure sectors, to consider asking investors once again for more cash to help them survive the pandemic.

Pubs group JD Wetherspoon (JDW) last week raised £93.7 million via a share placing, which follows a £138 million fundraise last April. We expect this to be the first in a new wave of companies tapping investors for cash.

Wetherspoon already had enough liquidity with around £139 million to tide it through to reopening sometime in the second quarter, but it was going to be a close call and hence the new fundraise.

The company is burning through around £17 million a month while its pubs are closed, and its banks insisted on a £70 million cash buffer.

Some fund managers worry that restrictions may remain in the pubs sector even after opening and that Wetherspoons may need to tap shareholders for a third time.

Investors have seemingly welcomed the latest fundraise as the shares at £11.67 are trading above the £11.20 placing price, implying that the benefits of increased financial strength outweigh the negative impact of dilution from issuing more stock.

‘With operating and financial leverage, we expect pubs, restaurants and other leisure operators to be key beneficiaries of a vaccine rollout,’ say analysts at investment bank Jefferies.

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